We Need to Talk About Inflation: 14 Urgent Lessons from the Last 2,000 Years

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But now people the world over are confronting a poisonous new economic reality and, with it, the prospect of vast and increasing wealth inequality. How have we arrived in this situation? And what, if anything, can we do about it? Celebrated economist Stephen D. King-one of the few to warn ahead of time about the latest inflationary upheaval-identifies key lessons from the history of inflation that policy makers chose not to heed. My kind of inflation book. There is lots of great storytelling, which lightens the subject matter, and makes it accessible to non-experts.”—Moira O’Neill, Financial Times, “Best Summer Books of 2023: Money”

King also is clearly correct that both supply‐​side and demand‐​side factors have driven the surge in the price level since 2021. Yet, one downside of his not outlining his own “model” of the economy is the failure to define his own preferred monetary rule and so make ajudgment on what actions central banks should have taken and when. He admits that in periods like what we’ve lived through, “policymakers are not easily able to distinguish inflationary squalls from periods of inflationary persistence.” That is true, but it is difficult to square with his justified criticism of the complacency of the economic establishment in letting the inflation genie out of the bottle of late. it leads to extreme redistributions of wealth that are rightly perceived as arbitrary and unfair, and King continued by looking at various historical examples of inflation - from the Roman Empire, the Spanish discovery of silver in South America in the 16th century, the French Revolution to the American Civil War. His conclusions? That money matters and that there is an inseparable relationship between monetary and fiscal policy.Why not? Industry experts say oil and gas companies saw bigger money in letting prices run higher before producing more supply. They can get away with this because big oil and gas producers don’t operate in a competitive market. They can manipulate supply by coordinating among themselves. Since the 1980s, two-thirds of all American industries have become more concentrated ii. have there been signs of monetary excess sufficient to indicate a heightened inflationary risk? And this is what the real income per capita numbers hide: large bouts of inflation create extreme winners and losers in quite undemocratic ways. Asudden bout of inflation obviously makes those on fixed incomes or stable government benefits alot worse off, while those for whom wage increases occur only infrequently see their purchasing power collapse. On the other hand, those who can borrow heavily and invest the funds in physical assets and real estate, or who have alot of pricing power over their labor, can often come out of inflationary periods sitting (relatively) pretty. These effects are often arbitrary and politically explosive. A book cannot do everything, though, and this one was written as the inflationary picture was continually evolving. Overall, it is the best book on the market for using this moment to deliver lessons in history and advice to policymakers. It somehow remains both broad and deep, explaining the perils of ever thinking that inflation is whipped right through to analyzing what went wrong with former UK prime minister Liz Truss’s infamous mini‐​budget.

Since the 1980s, when the US government all but abandoned antitrust enforcement, two-thirds of all American industries have become more concentrated. The major costs of large bouts of inflation are not that they make us worse off, though for many people they undoubtedly do. No, the three biggest costs of high inflation are: That is your right. But you'd be advised to read this book first."-Stephanie Flanders From investors and monetary authorities to governments and policy makers, almost everyone had assumed inflation was dead and buried. A FINANCIAL TIMES "BOOK TO READ IN 2023" "Everything you wanted to know about inflation but were afraid to ask."-Mervyn King "King's lessons command our attention."-Lawrence H.But they’re raising prices even as they rake in record profits. How can this be? They have so much market power they can raise prices with impunity.